![]() ![]() ![]() The committee tries to reach consensus on regulatory text. Negotiated rulemaking is a process whereby a committee comprised of key stakeholders holds public meetings to evaluate proposed rules. The Education Department will be holding a final round of negotiated rulemaking later this week to review the draft regulations pertaining to hardship indicators. It’s important to note that so far, this is a student loan forgiveness proposal - not a finalized plan that is available now. What’s Next For Biden’s Next Student Loan Forgiveness Plan This could allow the administration to consider any number of other factors evidencing hardship as a potential basis for student debt relief, coupled with the extent and longevity of that hardship. The Education Department could also consider “any other indicators of hardship identified by the Secretary,” as well as “the extent to which hardship is likely to persist.” But hardship is “not limited” to these indicators alone, according to the text. The regulations suggest that having one or more of the above indicators could provide a basis for student loan forgiveness under the new plan. Catch-All Provision For Student Loan Forgiveness ![]() It could also indicate problems with the school itself, if available data suggests low graduation or completion rates. The proposal would also potentially consider “whether the borrower has completed any postsecondary certificate or degree program for which they received title IV, HEA financial assistance.” Failure to complete a degree or certificate program could be an indication of hardship (such as if medical or financial barriers interfered with the borrower’s ability to graduate). The draft rules released last week also would allow the Education Department to explore the “sector and level of institution attended,” and to consider student outcomes relative to “typical student outcomes at the last program attended.” This could provide a pathway to relief for someone who attended a school with low graduation or completion rates. The new plan could also consider not only the borrower’s age, but the “age of the borrower’s loan based upon first disbursement or the disbursement of loans repaid by a consolidation loan.” Loan Forgiveness Based On Student Outcomes The new plan could provide more flexibility for those who struggle with health issues (and perhaps are also elderly) but don’t necessarily have a “total and permanent disability” as contemplated by that existing program. While there already is a disability discharge program for federal student loan borrowers, this option has a strict legal standard. The draft regulations say that indicators of hardship can include the borrower’s “age” and “disability” status. Personal hardships can also potentially be the basis for student loan forgiveness under the new Biden plan. Student Loan Forgiveness Tied To Personal Hardships The draft regulations suggest indicators of hardship under this prong could include “receipt of a Pell Grant and other information from the FAFSA form” demonstrating that the borrower is low-income, as could the “receipt of means-tested public benefits.” Specific benefits are not referenced in the draft, but this could include food stamps, certain kinds of Social Security benefits, Medicaid, or healthcare subsidies under the Affordable Care Act. Since other government agencies may have already determined that a borrower qualifies for certain programs based on financial need, this could allow for automatic loan forgiveness in certain cases. ![]() The proposed regulations, if enacted, would also allow the Education Department to consider borrowers for student loan forgiveness if they have already qualified for other government programs that are based on financial hardships. The draft regulations include a provision for “total consumer debt balances and required payments, relative to household income,” as well as “high-cost burdens for essential expenses, such as healthcare, caretaking, and housing.” Student Loan Forgiveness Based On Demonstrated Need The department could also look at a borrower’s other financial obligations as indicators of hardship. The regulations also provide that the department can evaluate the “type of loans and total debt balance owed for loans,” including for loans “not owed to the Department.” This could encompass private student loan debt, which typically is not factored in for other federal student loan relief programs, such as income-driven repayment other loan forgiveness options. Under the draft regulations, the Education Department could consider the “current repayment status and other repayment history information,” suggesting that borrowers who have clearly struggled with repayment for years (or perhaps have paid a lot on their loans but haven’t made a dent in the balance) could be eligible. ![]()
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